Long-time civil servant Laimdota Straujuma was nominated yesterday (6 January) to become Latvia's first female prime minister and said the Baltic state would continue tight fiscal policies leading up to parliamentary elections in October if her cabinet was approved.
Straujuma, 62, formerly agriculture minister, is set to take over from Valdis Dombrovskis, who resigned in November, taking responsibility for the collapse of a supermarket roof in the capital that killed more than 50 people.
"The government should continue the same macroeconomic policy which has been implemented so far," Straujuma told journalists after meeting President Andris Berzins to receive her nomination.
She said she expected the new government to be formed by four centre-right parties, with the opposition Union of Greens and Farmers expected to join the current members of the ruling coalition – Unity, the Reform Party and the National Alliance.
That would give the coalition a majority of votes in the 100-seat parliament, whose approval the new cabinet requires.
Dombrovskis's government fell short of a majority but enjoyed support from some independent legislators.
Standard & Poor's Ratings Services, which raised its outlook for Latvia to positive from stable on 13 December, said it did not expect the new government to usher in any major shifts in policy.
But some analysts said they were concerned that current economic reforms could stall during the election year.
"As 2014 is an election year, we could expect that reforms might be stalled … and it might have a negative impact on economic stability and growth in the long term," Edmunds Rudzitis, an economist at SEB bank, said.
Latvia's government and the central bank expect the economy to grow over 4% in 2014, a similar rate as in 2013.
The Baltic state, which had to take a rescue package from the International Monetary Fund (IMF) in 2008 to avoid devaluation, was the European Union's fastest growing economy in 2012 after one of the harshest austerity programmes in Europe.
On 1 January Latvia became the 18th member of the eurozone.